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Welcome to Episode #263 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, it’s time to take a look at the classic value stocks.
Every year, in the first week of the new year, Tracey runs a stock screen for classic value stocks. Last year, this screen returned 9 stocks, among them insurance and large financial services companies.
This year, the screen returned a more intriguing list.
Maybe it’s time to take a look at value stocks in 2022?
How to Screen for Classic Value Stocks
This screen for classic value stocks has all the value fundamentals, with the addition of the highest Zacks Ranks of Buy and Strong Buy, and the highest Zacks Style Scores for Value, of A and B.
This screen includes a P/E under 20, a P/S ratio under 1.0, a P/B ratio under 2.0, a P/Cash Flow under 20 and a PEG under 1.0.
With this many factors, it’s bound to be a short list. How many dirt-cheap value stocks with the top Zacks Ranks are there?
Turns out there are 12 to start this year. Tracey picked out 5.
Toll Brothers is the largest publicly-traded luxury home builder in America.
Shares are up 67.2% over the last year and trade near all-time highs.
But Toll Brothers is still dirt cheap with a forward P/E of just 7.4. It also has a PEG ratio of just 0.3. Toll has both growth and value, a rare combination.
Analysts expect Toll Brothers earnings to grow 46.3% in fiscal 2022 and another 16% in fiscal 2023.
Is it too late to buy Toll Brothers for this hot housing cycle?
Arrow Electronics, which guides innovation forward for over 180,000 tech manufacturers and service providers, is expected to see sales grow 19% this year to $34.3 billion.
Arrow’s earnings are forecast to grow 88% in 2021 and another 6.5% in 2022.
Arrow Electronics shares are up 40% in the last year, and are trading at 5-year highs, but they’re still cheap.
Arrow has a forward P/E of 8.8 and a P/S ratio of just 0.3.
Should you buy Arrow even as it’s hitting new highs?
Kohl’s Corp. is a retailer with 1,100 stores in 49 states. In its third quarter earnings, it raised its full year guidance as comparable sales were up 14.7% compared to a year ago.
Kohl’s raised its earnings guidance range, and the analysts did the same, as earnings are expected to rise 704% in fiscal 2021.
Over the last year, Kohl’s shares have gained 28% but have weakened over the past few weeks.
They’re cheaper than ever with a forward P/E of just 6.8 and a PEG ratio of 0.9.
Should Kohl’s be a retailer on your short list this year?
TotalEnergies is a French oil company, which operates in exploration and production, gas and renewables and petrochemicals. It has a $136.3 billion market cap.
In the third quarter, TotalEnergies’ cash flow was up 30% year-over-year as oil and gas prices soared.
TotalEnergies can easily pay its juicy dividend, currently yielding 6%.
Shares were up 20.9% in the last year, but TotalEnergies is still cheap with a forward P/E of just 7.1 and a Price/Cash Flow of 5.
Earnings are expected to rise 10.2% in 2022.
Should income investors be looking at TotalEnergies in 2022?
Image: Bigstock
Top Classic Value Stocks to Start 2022
Welcome to Episode #263 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, it’s time to take a look at the classic value stocks.
Every year, in the first week of the new year, Tracey runs a stock screen for classic value stocks. Last year, this screen returned 9 stocks, among them insurance and large financial services companies.
This year, the screen returned a more intriguing list.
Maybe it’s time to take a look at value stocks in 2022?
How to Screen for Classic Value Stocks
This screen for classic value stocks has all the value fundamentals, with the addition of the highest Zacks Ranks of Buy and Strong Buy, and the highest Zacks Style Scores for Value, of A and B.
This screen includes a P/E under 20, a P/S ratio under 1.0, a P/B ratio under 2.0, a P/Cash Flow under 20 and a PEG under 1.0.
With this many factors, it’s bound to be a short list. How many dirt-cheap value stocks with the top Zacks Ranks are there?
Turns out there are 12 to start this year. Tracey picked out 5.
5 Top Classic Value Stocks for 2022
1. Toll Brothers (TOL - Free Report)
Toll Brothers is the largest publicly-traded luxury home builder in America.
Shares are up 67.2% over the last year and trade near all-time highs.
But Toll Brothers is still dirt cheap with a forward P/E of just 7.4. It also has a PEG ratio of just 0.3. Toll has both growth and value, a rare combination.
Analysts expect Toll Brothers earnings to grow 46.3% in fiscal 2022 and another 16% in fiscal 2023.
Is it too late to buy Toll Brothers for this hot housing cycle?
2. Arrow Electronics (ARW - Free Report)
Arrow Electronics, which guides innovation forward for over 180,000 tech manufacturers and service providers, is expected to see sales grow 19% this year to $34.3 billion.
Arrow’s earnings are forecast to grow 88% in 2021 and another 6.5% in 2022.
Arrow Electronics shares are up 40% in the last year, and are trading at 5-year highs, but they’re still cheap.
Arrow has a forward P/E of 8.8 and a P/S ratio of just 0.3.
Should you buy Arrow even as it’s hitting new highs?
3. Kohl’s Corp. (KSS - Free Report)
Kohl’s Corp. is a retailer with 1,100 stores in 49 states. In its third quarter earnings, it raised its full year guidance as comparable sales were up 14.7% compared to a year ago.
Kohl’s raised its earnings guidance range, and the analysts did the same, as earnings are expected to rise 704% in fiscal 2021.
Over the last year, Kohl’s shares have gained 28% but have weakened over the past few weeks.
They’re cheaper than ever with a forward P/E of just 6.8 and a PEG ratio of 0.9.
Should Kohl’s be a retailer on your short list this year?
4. TotalEnergies SE (TTE - Free Report)
TotalEnergies is a French oil company, which operates in exploration and production, gas and renewables and petrochemicals. It has a $136.3 billion market cap.
In the third quarter, TotalEnergies’ cash flow was up 30% year-over-year as oil and gas prices soared.
TotalEnergies can easily pay its juicy dividend, currently yielding 6%.
Shares were up 20.9% in the last year, but TotalEnergies is still cheap with a forward P/E of just 7.1 and a Price/Cash Flow of 5.
Earnings are expected to rise 10.2% in 2022.
Should income investors be looking at TotalEnergies in 2022?
5. Lithia Motors (LAD - Free Report)
Lithia Motors owns auto dealerships and Driveway, its online auto buying and financing business.
On Jan 5, Lithia announced that Driveway had blown by its December estimates, posting 1,650 transactions, well above the 1,250 estimate.
That is a 15,000 annual-run rate.
Lithia Motors doesn’t believe these sales are being pulled from its brick-and-mortar business as 96% of Driveway’s customers were new to Lithia.
Lithia shares remain cheap as earnings are expected to rise 110% in 2021. It has a forward P/E of just 8 and a PEG ratio of 0.4.
Should investors be jumping on Lithia Motors on this share weakness?
Find out the Other 7 Stocks in the Classic Value Screen
These are just 5 of the 12 stocks in the top classic value stock screen.
What are the other 7?
Tune into this week’s podcast to find out.